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news 28 Mar 13

Brussels to Probe Serbian Subsidies to Fiat

The European Commission wants to investigate whether Serbia's decision to subsidize the Fiat plant in Kragujevac is in line with its interim EU trade deal.

Tanjug, Blic, B92

Peter Stano, spokesperson for the Enlargement Commissioner, said on Wednesday that Brussels was studying Serbia's subsidies to the car maker company Fiat, which enable the firm to sell cars at a discount price in Serbia.

"We need to examine whether this measure is compatible with the interim trade agreement, in particular with the provisions on state assistance," Stano said.

Serbia and Italian carmaker Fiat have agreed on a subsidy deal to produce a cheaper version of the 500L compact car for the Serbian market.

Under the terms of the deal, the Serbian unit of Fiat will produce the car for 10,900 euro, which is 3,000 euro less than its regular price.

The Serbian unit of Fiat is a joint venture which is 67 per cent owned by Fiat and 33 per cent by Serbian government.

The factory will use a one-time government subsidy for 1,400 new hires this year and next year to produce the cheaper model.

"Fiat has pledged to hire 1,400 new workers and for that they will get subsidies of 10,000 euro per every new worker and we have agreed that the company will use that money to produce a version of 500L for the domestic market," Dinkic told the daily newspaper Blic.

The deal has angered other car importers in Serbia who protested in white shirts at Belgrade's Car Show on Monday, complaining that the arrangement discriminates against them.

However, Dinkic said the complaints were invalid, because the government has only provided incentives for new jobs.

Aleksandar Ljubic, a state secretary with the Ministry of Finance and Economy, said that no lobby, including car importers, can deter the government from pursuing its strategy of creating jobs and boosting employment.

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